Correlation Between AIR PRODCHEMICALS and X FAB
Can any of the company-specific risk be diversified away by investing in both AIR PRODCHEMICALS and X FAB at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining AIR PRODCHEMICALS and X FAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AIR PRODCHEMICALS and X FAB Silicon Foundries, you can compare the effects of market volatilities on AIR PRODCHEMICALS and X FAB and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in AIR PRODCHEMICALS with a short position of X FAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIR PRODCHEMICALS and X FAB.
Diversification Opportunities for AIR PRODCHEMICALS and X FAB
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AIR and XFB is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding AIR PRODCHEMICALS and X FAB Silicon Foundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X FAB Silicon and AIR PRODCHEMICALS is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on AIR PRODCHEMICALS are associated (or correlated) with X FAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X FAB Silicon has no effect on the direction of AIR PRODCHEMICALS i.e., AIR PRODCHEMICALS and X FAB go up and down completely randomly.
Pair Corralation between AIR PRODCHEMICALS and X FAB
Assuming the 90 days trading horizon AIR PRODCHEMICALS is expected to under-perform the X FAB. But the stock apears to be less risky and, when comparing its historical volatility, AIR PRODCHEMICALS is 3.56 times less risky than X FAB. The stock trades about -0.95 of its potential returns per unit of risk. The X FAB Silicon Foundries is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 509.00 in X FAB Silicon Foundries on October 9, 2024 and sell it today you would lose (2.00) from holding X FAB Silicon Foundries or give up 0.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AIR PRODCHEMICALS vs. X FAB Silicon Foundries
Performance |
| Timeline |
| AIR PRODCHEMICALS |
| X FAB Silicon |
AIR PRODCHEMICALS and X FAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIR PRODCHEMICALS and X FAB
The main advantage of trading using opposite AIR PRODCHEMICALS and X FAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIR PRODCHEMICALS position performs unexpectedly, X FAB can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in X FAB will offset losses from the drop in X FAB's long position.| AIR PRODCHEMICALS vs. MidCap Financial Investment | AIR PRODCHEMICALS vs. HK Electric Investments | AIR PRODCHEMICALS vs. PennyMac Mortgage Investment | AIR PRODCHEMICALS vs. Tower Semiconductor |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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